Executive summary

Regulations were recently issued on the Tax Incentive for Scientific Research and Innovation, and official forms for registering under this tax incentive are now available.

The Tax Incentive for Scientific Research and Innovation has been in force since 1 January 2024 and is intended to replace the Non-Habitual Resident (NHR) regime.

Administrative Order n. 352/2024/1, published on 23 December 2024, provides important updates regarding the enrollment process, the list of highly qualified professions, the definition of the Economic Activity Codes for industrial and service companies, and level of qualifications required, among other things.

Further, on 13 February 2025, the AICEP Portugal Global — Trade & Investment Agency and IAPMEI — Agency for Competitiveness and Innovation released the list of activities considered relevant for the national economy, in addition to defining the list and requirements of qualified jobs.

And, on 20 February 2025, the official forms for registering under the Tax Incentive for Scientific Research and Innovation were published in the Official Journal.

The NHR regime still applies for individuals who became tax residents before 31 December 2024 and register as NHRs before 31 March 2025

Tax Incentive for Scientific Research and Innovation — what's new

The Tax Incentive for Scientific Research and Innovation (IFICI) provides that, for a 10-year period, a flat 20% tax rate applies for net employment and self-employment income from eligible activities. A tax exemption is also provided for foreign income, with the exception of Category H (pensions) and certain income derived from tax havens, provided eligible activities are performed by the taxpayers.

Eligibility

Taxpayers who become tax residents from 2024 onward and have not been resident in Portugal in any of the prior five years may benefit from this regime, provided they carry out (at least) one of the following activities.

1. Lecturing in higher education and scientific research. This may include scientific employment in entities, structures and networks within the national science and technology system, as well as working and or being a member of a governing body in an entity recognized as a technology and innovation center.
2. Holding qualified jobs or board member positions qualifying for contractual benefits toward productive investment. This requirement is in accordance with Chapter II of the Portuguese Investment Tax Code.
3. Working in highly qualified professions. Administrative Order n. 352/2024/1, of 23 December 2024, defines these professions, which are performed in either:
1. Companies with significant applications, in the tax year of commencement of duties or in the five previous years, that benefit from or have benefited from the tax support regime for investment (RFAI), as per Chapter III of the Investment Tax Code
2. An industrial and service company, the main activity of which corresponds to the relevant code defined in Administrative Order n. 352/2024/1, of 23 December 2024 and that exports at least 50% of its turnover at the time the professional begins working for the company or service as a board member or in any of the two previous years

Highly qualified professions, as listed in Portuguese list of Professions, include:

• 112 — General director and executive manager
• 12 — Directors (Head) of administrative and commercial services
• 13 — Production and specialized services directors (except 1349)
• 21 — Specialists in the physical, mathematical, engineering and related sciences fields (except 216)
• 2163.1 — Designer of industrial product or equipment
• 221 — Physicians
• 231 — Teacher at universities and higher education institutions
• 25 — Information and communication technology (ICT) specialists

In addition, employees who work in the highly qualified professions must now hold at least: (a) Level 8 of the European Qualifications (i.e., a doctorate or equivalent degree) or Level 8 of the International Standard Classification of Education (ISCED); or (b) Level 6 of the European Qualifications Framework or Level 6 of the ISCED (i.e., a bachelor's degree or equivalent), and have three years of duly proven professional experience.

Eligible economic activity codes for industrial or service companies, as well as for companies that benefit or have benefited from RFAI include:

• Extractive industries (divisions 05 to 09)
• Manufacturing industries (divisions 10 to 33)
• Information and Communication Activities (divisions 58 to 63)
• Research and development activities (Group 721)
• Teaching at universities and higher institutions — subclass 85420
• Human health activities — subclasses 86100 to 86904

4. Holding qualified jobs or board member positions in entities conducting certain activities relevant to the national economy. These activities must be recognized by AICEP Portugal Global — Trade & Investment Agency or by IAPMEI — Agency for Competitiveness and Innovation as relevant to the national economy, particularly in the context of attracting productive investment or reducing regional differences.

According to the notices issued by AICEP and IAPMEI on 13 February 2025, the scope of the activities considered as relevant for the national economy has substantially expanded, making the tax incentive a highly effective instrument to attract skilled individuals to Portugal. In addition, the notices define the concept of qualified jobs for purposes of these eligible activities. These notices will enter into force once published in the official journal. The notice from IAPMEI was published in the Official Journal on 20 February 2025.

Qualified jobs for these purposes include:

• 112 — General director and executive manager
• 12 — Directors (Head) of administrative and commercial services
• 13 — Production and specialized services directors (except 1349)
• 14 — Directors (Head) of hotels, restaurants, trade activities and other services
• 21 — Specialists in the physical, mathematical, engineering and related sciences fields
• 221 — Physicians
• 231 — Teacher at universities and higher education institutions
• 241 — Specialists in finances and accounting (except 2411)
• 25 — Information and communication technology (ICT) specialists
• 2654 — Directors, producers, and related directors in film, theater, television, and radio
• 31 — Technicians and professions in the sciences and engineering, at intermediate level

In addition, employees in these qualified jobs, performed at entities recognized by AICEP and IAPMEI as relevant to the national economy, must now (a) hold at least Level 5 of the European Qualifications or level 5 of the International Standard Classification of Education (ISCED) (i.e., post-secondary non-higher level qualification with credits to pursue higher level studies and diploma in technological specialization); and (b) prove they comply with the applicable requirements in the case of regulated activities.

Economic activities relevant for the national economy for these purposes include:

• Extractive industries — divisions 05 to 09
• Manufacturing industries — divisions 10 to 33
• Electricity, gas, steam, hot and cold water, and cold air — division 35
• Construction — division 42
• Accommodation, food service, and similar — classes 5511 and 5512
• Information and communication activities — divisions 58 to 63
• Financial and insurance activities — classes 6420 and 6630
• Consulting, scientific, technical, and similar activities — class 7010 and divisions 71 to 72
• Administrative and support service activities — class 8211
• Education — class 8542
• Human health and social support activities — division 86 (except subclasses 86905 and 86906)

Other economic activities developed in the context of projects awarded as National Interest Projects or Inland Investment projects are also eligible as relevant activities for the national economy.

5. Research and development personnel, whose costs are eligible for the purposes of the tax incentive system in research and business development, in accordance with the Investment Tax Code
6. Jobs and board members in entities certified as startups under the Portuguese Start-Up Law
7. Jobs or other activities carried out by tax residents in the autonomous regions of the Azores and Madeira, under terms to be defined by regional decree

Deadline for applications

According to Article 2 of Administrative Order n. 352/2024/1, residents in Portuguese territory must submit their registration applications by 15 January of the year after they become residents (for 2024 residents, the deadline is 15 March 2025). Registration applications and notifications of changes under Article 5 must use an official form approved by the Minister of Finance, which has been published on 20 February 2025.

Benefits

Individuals who meet the specified criteria can benefit from a special tax rate of 20% on net income derived from employment and self-employment within eligible activities for a period of 10 consecutive years. This period begins from the year they register as a tax-resident in Portugal, with the flexibility to pause and resume the benefits under conditions similar to the NHR regime.

Under this regime, foreign-sourced income is exempt from taxation for a period of 10 years, except for certain income from tax havens. This includes foreign employment and self-employment income, investment income, rental income and capital gains, provided the individual engages in one of the listed activities. Foreign income from Category H (pensions) is not eligible.

End of NHR regime and transitional regime in force

The 2024 State Budget Law revoked the NHR regime effectively as from 1 January 2024. However, the regime will continue to apply for those already registered as NHR until the end of the 10-year period (provided that they meet the conditions to be considered tax residents of Portugal in each of those years).

The NHR regime may still be applied, to those who became tax residents of Portugal until 31 December 2024, provided certain conditions are met, and the individuals register as NHR before 31 March 2025. If, however, the application is submitted after that deadline, and is granted, the respective taxation as NHR, will take effect from the year, inclusive, in which the application for registration is made, but only for the remaining period, until the end of the tenth consecutive year, counted from the year in which the taxable person became resident in Portuguese territory.

Next steps

Although there are some commonalities among the regimes, it is crucial to recognize the distinct circumstances that set each apart.

Affected taxpayers should consult with their tax advisors to help determine whether an individual qualifies for the transitional NHR regime, the new IFICI incentive, or other available tax incentives, such as the incentive for the Youth or the former-resident regime.

To access the new incentive, two separate eligibility assessments are necessary: one for the entity and another for the individual. Given the ever-changing landscape, the eligibility assessment for the entity is dynamic and continuously updated, making consultation with a professional that much more important in supporting the taxpayer's registration and documentation needs.